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Tuesday, November 25, 2014

Purchasing Auto Insurance: Most Common Questions

Purchasing auto insurance seems easy enough just sign on the dotted line, start paying premiums, and hit the road! It’s more complicated than that. When the time comes to file claim, many drivers are surprised to find that they are not protected as they thought. When making a decision on a new policy or a renewal, knowing the answers to the following common questions will help you make the best choice.

What is liability coverage?
Liability coverage protects you if you are at fault in an accident. The injured party will not be able to come after your house, car or other property. Your insurance company will pay damages up to the limits of your policy.

What is Uninsured Motorist coverage?
Uninsured Motorist (UIM) coverage protects you when the other party in an accident is at fault and they are uninsured. Even though it is required by law to carry insurance, many drivers do not. If one of these uninsured drivers causes an accident that you are involved in, the UIM coverage will protect you. Your insurer will pay up to the limits of your policy (see more on this below)

What does $50,000/$100,000 mean?
Two dollar amounts expressed like this ($50,000/100,000) tell you the limits of your policy. The first number is how much coverage you have for each person in the vehicle. The second number is how much coverage you have in total for the accident. For example, using limits, if you are in an accident and there are three of you in the vehicle, each person would be covered up to $ 50,000, but all three would have to share a total of $100,000. There can be different amounts for different types of coverage, such as liability and uninsured motorist .

How much coverage should I buy?
Buy as much as your insurance company will sell you or that you can afford. If you ever need it, you don’t want to be in a situation where the insurance payout isn’t enough to cover the costs of the accident. It is generally not much more expensive to add more coverage. While the difference varies from company to company, you will not, for example pay twice as much for twice the coverage. Ask your agent how much it would be to add coverage. You may be surprised at how little it is!